Mobile Changes Everything

“If we could get rid of all the cards in our wallet, the loyalty cards, the cash, everything we do with our wallet and replace that with a smartphone, wouldn’t that be a really powerful thing?” he said recently at the Carlsbad office of fintech startup Bitmo, which Smallwood founded last year and heads up as CEO. “What we feel is we can use technology to better solve that problem since we always have our connected smartphones with us at all times.”

Smallwood and his team say they’re taking the best of the mobile payment applications, from Venmo’s social peer-to-peer payment system to the Starbucks app’s rewards program, and rolling them into one.

“We’re really focused around the overall experience of how people pay and get paid,” he said.

“I think we all realize that mobile is here to stay, this ubiquitous device we all carry around, these internet-connected computers in our pocket.”

Glacial Pace

The move away from cash started about 20 years ago with the adoption of cards and electric terminals.

But despite the success of that transition, “the changes in the financial industry are — and are likely to always remain — glacial,” said a 2014 white paper by Oracle on the future of mobile payments. “As a direct result, the move away from the physical wallet is taking longer than nearly all expert predictions for the future of the market.”

And while companies such as CVS Health have recently launched their own apps for mobile payments, Smallwood said he is betting that consumers will soon tire of downloading a new program for each store at which they shop.

“We see this tremendous growth of all of these payment applications to the point where I think in the next year we’re going to become really cluttered as consumers with all of these types of payment applications,” he said.

One Platform

Bitmo’s aim is to get merchants on its platform, allowing consumers to make both peer-to-peer payments — like Venmo, a favorite among millennials, does — as well as purchases at retail stores, like ApplePay does. Social aspects such as messaging will also be a component.

Although adoption may be slower than predicted, the use of mobile payments continues to grow, according to a report last year by the GSMA, a global trade association for mobile operators.

In December, the mobile money industry processed more than 1 billion transactions, the GSMA said.